In this paper we develop a two-country global monetary economy where a monetary equilibrium exists because of fundamentaldecentralized trade frictions ? a Lagos-Wright search and matching friction. In the decentralized markets (DM), the terms of trade can be determined either by bargaining or by...

We explore how the informational frictions underlying monetary exchange affect international exchange rate dynamics. Using a two-country, two-sector model, we show that information frictions imply a particular restriction on domestic price dynamics and hence on international nominal and real...

The seminal work of Huggett [“The risk-free rate in heterogeneous-agent incomplete-insurance economies”, Journal of Economic Dynamics and Control, 1993, 17(5-6), 953-969] showed that there exists a unique stationary distribution of agent types, given by their individual states of asset and...